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Here is the CBN Annual Report And Statement of Accounts For Year Ended Dec 31st 2009. It provides information on the corporate activities of the Central Bank and the monetary policy and surveillance activities and operations of the bank. The second part of the report includes reports on the global economy and the Nigerian economy with a particular emphasis on the financial sector.
CBN 2009 Annual Report (571)The Monetary Policy Committee of the Central Bank of Nigeria held their regular meeting on November 22nd and 23rd. The key decisions were:
1. To Retain the Monetary policy Rate (MPR) at 6.25 per cent.
2. To adjust the corridor to +/- 200 basis points, implying Standing Lending Facility (SLF) rate of 8.25 per cent, and Standing Deposit Facility (SDF) rate of 4.25 per cent.
3. Maintain the policy stance of a stable exchange rate.
4. Continue to monitor inflationary trends with a view to taking appropriate steps as and when necessary.
5. On the stance of monetary policy in the year ahead, the Committee reaffirmed that monetary policy would seek to exert pressure on aggregate demand, thereby helping to lower inflation expectations.
The report is below:
Late last month, <a href=”http://online.wsj.com/article/BT-CO-20101022-710047.html”>Fitch lowered Nigeria’s outlook primarily because of the withdrawals from the Crude Accounts</a>. Here is an excerpt from the report in the Wall Street Journal:
<blockquote>Fitch Ratings moved toward a possible downgrade of Nigeria’s junk-level ratings, raising concerns about the country pulling money from a crude-oil account the help fund government operations.
That and a continued gradual fall of international reserves at a time of high oil prices and record oil production is a major concern, according to Fitch. It also raises vulnerability to any renewed fall in oil prices and threatens macroeconomic stability.
Fitch director Veronica Kalema said that while there were plans to remedy the situation through the establishment of a sovereign wealth fund and removal of the fuel subsidy currently taken out of the country’s excess crude account, implementing those actions “will be challenging before elections expected in April next year.” The poll has increased short-term political uncertainty, Fitch said.
Other major constraints on the rating — low per capita income, weak transparency and governance and the infrastructure deficit, especially the power shortage — remain in place. Nigeria’s national infrastructure is poor and power generation is grossly inadequate, resulting in low industrial production while offices and homes go for days without electricity.
Fitch revised Nigeria’s outlook to negative.
Fitch did note that Nigeria’s ratings — which stand at BB-, or three notches into junk — are supported by robust non-oil sector growth, and low public and external debt ratios. The recovery in oil production in the fourth quarter last year, and renewed reform momentum this year, also support the ratings.
In August, the nation said gross domestic product grew 7.4% in the first half of the year, building on 5.9% growth the same time in 2009. The enhanced economic development was linked to growth in non-oil sectors and improvement in oil production.
Earlier this month, the International Monetary Fund said the economies of sub-Saharan Africa will be among the best performing in the world this year and next, lagging only behind those in emerging Asia. It raised its growth forecasts for Nigeria’s economy to 7.4% in both 2010 and 2011 from 7% and 7.3%, respectively.</blockquote>
But in the last week, Fitch affirmed it’s long-term investment rating of B+ for Nigeria. Here is the excerpt of that report from Bloomberg:
<blockquote>Standard & Poor’s Ratings Services affirmed its ‘B+’ long-term rating on Nigeria, Africa’s most populous nation and top oil producer, with a stable outlook before a $500 million Eurobond sale next month.
The agency also affirmed its ‘B’ short-term foreign and local currency sovereign credit ratings on the West African nation, it said in a statement today.
“The outlook is stable, reflecting our expectation that Nigeria will maintain its strong external and fiscal balance sheet and that its budgetary performance will gradually improve over the next few years,” it said.
The announcement “will help to allay the concern of potential investors in Nigeria’s Eurobond,” especially after Fitch Ratings cut its outlook on the country to negative from stable on Oct. 22, said Bismarck Rewane, chief executive officer of Financial Derivatives Co. Ltd., a fund manager.
Nigeria plans to appoint bookrunners next week for its first-ever Eurobond sale, planned for mid-December, Abraham Nwankwo, director general of the Debt Management Office, said today.
“The ratings on Nigeria are constrained by high political risk, but supported by a strong balance sheet,” Standard & Poor’s said in the statement.
Elections
The nation of about 150 million people is scheduled to hold general elections in April in which incumbent President Goodluck Jonathan, from the mainly Christian south, has said he will run. Politicians from the predominantly Muslim north say that decision runs counter to an agreement by the ruling People’s Democratic Party to reserve the office for the region until 2015. Jonathan stepped in to the office after the death of former President Umaru Yar’Adua, a northern Muslim, on May 5.
Fitch Ratings lowered its outlook on Nigeria’s BB- rating to “negative” on Oct. 22, concerned about withdrawals from the excess crude account and a drop in foreign currency reserves. The decline in reserves increased the risk to the economy from any renewed drop in oil prices, Fitch said.
Nigeria’s foreign-exchange reserves fell 7.6 percent to $33.9 billion in the month to Oct. 21, according to data on the website of the Central Bank of Nigeria.
Nigeria’s economy, the second-biggest on the continent after South Africa, is expected to grow 7.8 percent in 2010, up from 7 percent last year, driven by non-oil industries such as agriculture, central bank Governor Lamido Sanusi said on Sept. 21. </blockquote>
To get the full details, you can download a copy of their report below. I believe that the report by Fitch is the most detailed analysis and description of the Nigerian economy.
Fitch Ratings For Nigeria 2010 (188)
Proshare has been doing a consistently good job of preparing a detailed review and analysis of the NSE every month. Here is their report for the month of October. It has a detailed breakdown of the NSE activity for the month as well as the company results reported during the month.
NSE Monthly Report - Proshare NG - October 2010 (136)And here are the official NSE reports for the month of September and October 2010
NSE Monthly Report - Sept 2010 (144).
NSE Activity Report For October 2010 (181)FSDH has also released the Economic and Financial Review for Q3 2010 and their outlook for Q4. It is a very thorough and detailed report. Please take time to read it. It is worth the time.
FSDH - Quarterly Economic Review - Q3 2010 (692)The team at Access Bank have prepared a very detailed and informative review of the Nigerian economy for the 3rd quarter. You can read below.
In: Economy|Market Analysis|News|special reports|stock exchange
20 Oct 2010Below is the Monthly Economic News and Views presentation given by B.J Belgore for October 2010. As usual, it is a very very detailed and informative presentation. You will do well to read the entire thing.
LBS Executive Breakfast Session - October 2010 (252)In recent weeks, the CBN has released some press releases and statements and guidelines. You can read them below as well as the recent speech by the CBN Governor at the CIBN Conference.
CBN - Circuiar On The Universal Banking Model - Sept 7 2010 (108).
CBN - Commercial Banking License Guidelines (163).
CBN - Guideline For Granting Liquid Asset Status To State Govt Bonds (140).
CBN - Press Release - Update On Capitalization of Wema Bank and Unity Bank - Oct 4th 2010 (109).
CBN Power Initiative To Slash banks Overhead By 30 (120).
CBN Governor Keynote Address At 4th Annual Banking And Finance Conference of CIBN (362).
Communique for September 21 MPC (158)The <a href=”http://www.nigerianstat.gov.ng/”>National Bureau of Statistics</a> recently released the Consumer Price Index for August 2010. You can read the full report below. But here is the summary:
<blockquote>CONSUMER PRICE INDEX: AUGUST 2010
(BASE PERIOD NOVEMBER 2009 = 100)
BRIEF METHODOLOGY:
This edition of the Statistical News contains the revised Consumer Price Index (CPI) based on Nigeria Living Standard Survey (NLSS) 2003/2004. The consumption expenditure data were revalued to November 2009 which is the base period for the revised CPI.The May 2003 based and September 1985 based indices are being continued using factors derived from the new CPI. All of these indices will yield the same price change for any commodity group contained in all the series.
A new sub index – Imported Food Index- is available in the revised CPI.A TOTAL of 10534 informants spread across the country provide price data for the compilation of theNew CPI each month. Also, 740 product specifications are priced in each centre for computation of the New CPI. More enquiries relating to the CPI revision can be obtained from ofnwaboku@nigerianstat.gov.ng or kocimo@nigerianstat.gov.ng.
ALL ITEMS INDEX
The Composite Consumer Price Index (CPI) rose by 13.7 percent year-on-year in August 2010. This is higher than 13.0 percent recorded in the previous month in the new CPI series. The monthly change of the CPI was 1.8 percent increase when compared with July 2010. The urban All Items monthly index rose by 1.3 percent while the corresponding rural index recorded 2.1 percent increase when compared with the preceding month. The year-on-year average consumer price level as at August 2010 for Urban and Rural dwellers rose by 10.9 and 15.6 percent respectively. The percentage change in the average composite CPI for the twelve-month period ending August 2010 over the average of the CPI for the previous twelve-month period was 13.5. This was marginally higher than what was recorded by making similar comparison in July 2010. The corresponding 12- month average percent change for urban and rural indices rose by 10.2 and 15.3 respectively.
FOOD INDEX
Average monthly Food prices rose by 2.0 percent in August 2010 when compared with July of same year. The level of the Composite Food Index was higher than the corresponding level a year ago by 15.1 percent. The average annual rate of rise of the index was 14.7 percent for the twelve-month period ending August 2010. The rise in the index was caused mainly by slight increase in the prices of some food items like yam, potatoes, meat, fish, cooking oil, fruits and vegetables.
ALL ITEMS LESS FARM PRODUCE
The “All items less Farm Produce” index which excludes the prices of agricultural products rose by 1.5 percent in August 2010 when compared with July 2010. The increase was due to price rise observed with some pharmaceutical products and household equipments. In the twelve-month to August 2010, the index rose by 12.4 percent while the average annual rate of rise of the index was 11.5 percent for the twelve-month period ending August 2010.</blockquote>
They also released the Revised GDP for 2009 and the Estimates for Q1 and Q2 2010. The GDP economy grew by over 7% in Q2 2010. Here is an excerpt:
<blockquote>On an aggregate basis, the economy when measured by the Real Gross Domestic Product (GDP), grew by 7.69 percent in the second quarter of 2010 as against 7.45 percent in the corresponding quarter of 2009 as shown in Figure 1.
The 0.24 percentage point increase in Real GDP growth observed in the first quarter of 2010 was accounted for by the increase in production in the oil sector and wholesale & retail trade activities in the economy. The nominal GDP for the second quarter of 2010 was estimated at 6,824,477.43 million naira as against the 5,872,694.58 million naira during the corresponding quarter of 2009 thus indicating an increase.
The economy, which can be broken into two broad output groups, that is, Oil and Non-oil sectors, had both sectors witnessing increased output in the second quarter of 2010. The non-oil sector growth was driven by growth in activities recorded in the wholesale & retail trade sector, while the oil sector output increased as a result of the Federal Government’s amnesty and post amnesty development programme for the Niger Delta which restored peace in the area thereby ensuring re-entry/ recommencement of operations and encouraging investments in the sector.</blockquote>
You can download the report below:
National Bureau of Statistics - Revised 2009 GDP and Estimates for Q1-Q2 2010 (635)
In: Economy
27 Sep 2010In August, the Federal Government of Nigeria received the report of the Presidential Task Force given the responsibility of coming up with a road map for reforming the power sector. Here is their executive summary:
Introduction and Executive Summary
The growth, prosperity and national security of any country is critically dependent upon the adequacy of its electricity supply industry. Indeed the link between electricity supply and economic development is such that the health of the industry is a matter of deep and personal concern to all citizens. Nigeria is no exception. Over the past two decades, the stalled expansion of Nigeria’s grid capacity, combined with the high cost of diesel and petrol generation, has crippled the growth of the country’s productive and commercial industries.
It has stifled the creation of the jobs which are urgently needed in a country with a large and rapidly growing population; and the erratic and unpredictable nature of electricity supply has engendered a deep and bitter sense of frustration that is felt across the country as a whole and in its urban centres in particular. Electricity consumers and the citizenry as a whole demand a fundamental reversal of the long and debilitating malaise which has blighted the industry and, in doing so, bridled the tremendous energy and creativity of this great and populous nation. More particularly they demand real and immediate improvements in service levels.
In response to this demand, the Federal Government will not pretend that the task ahead will be an easy one. But it is determined to root out the canker which lies at the very heart of the industry. More particularly, the Federal Government has stressed the need to return to the task of pursuing the fundamental changes to the ownership, control and regulation of the sector that have been outlined in the National Electric Power Policy (2002) and enshrined in the Electric Power Sector Reform (EPSR) Act of 2005.
To meet our Vision 20:2020 target of 40,000MW will require investments in power generating capacity alone of at least US$ 3.5 billion per annum for the next 10 years. Correspondingly large investments will also have to be made in the other parts of the supply chain (i.e. the fuel-to-power infrastructure and the power transmission and distribution networks). These sums cannot and will not be funded and directed by the Federal Government. Rather, central to the development of the sector will be the need to incentivise the private sector to partner with government in this endeavour. At the same time, however, the Federal Government is acutely aware that improvements in service levels cannot wait until the industry has been commercialised.
The Government is, therefore, taking active steps to ensure modest but genuinely realisable improvements in the amount and quality of electricity supplied to customers in all regions of the country. In summary, this Roadmap outlines our plan to accelerate the pace of activity with respect to reforms already mandated under the EPSR Act and, at the same time and in support of this, a renewed drive to improve on short term service delivery.
You can read the abridged and full versions of their reports below:
Presidential Task Force – Roadmap for Power Sector Reform – Full
Presidential Task Force – Roadmap For Power Sector Reform – Summary
FSDH Securities, IBTC Asset Management and Access Bank have all prepared well-written and thorough Economic Reports for Q2 2010. They are worth reading. They also provided outlooks for the rest of the year. Their outlooks were generally positive. Here is Access bank’s outlook for the rest of the year:
<blockquote>
- GDP growth to stay above 6% in the near – medium term. NBS recently projected that the economy would grow by 7.74% by end-2010, up from 6.66% recorded in 2009. However, the growth trajectory may be undermined by a downward spiral in oil price at the international market, amid weak demand fundamentals, poor state of infrastructure, sustained inflationary pressures and the possibility of breakdown of FG’s Amnesty Programme.
- Moderate inflationary pressures due to CBN’s AMCON, SME and Power Sector Intervention Funds. Expansionary nature of the budget, moderate increase in commodity prices, announcement effect of salary increase for public sector employees and the proposed removal of petroleum products subsidy may pose additional upside risks to price stability. However, inflation appears to be effectively balanced by the continued underperformance of monetary aggregates, well-anchored inflationary expectations, weak aggregate demand, adequate supply of food and petroleum products, as well as stability in Naira’s exchange rate.
- Naira to stay stable against the US Dollar in the near term. CBN remains the largest supplier of foreign exchange in the economy and with expected increases in sale of FX by oil companies following FG’s peace deal with militants, Naira would further stabilize at current levels. Naira’s outlook remains tied to size of external reserves, FX demand, sustained high crude oil price, as well as development in global economy.
- Domestic interest rate to remain stable at current levels. Decline in statutory returns and the erosion of confidence in the market pose upside risks to a stable interest rate outlook. However, the CBN extension of its guarantee for all interbank transactions from December 2010 to June 30, 2011 will likely stabilize rates at current levels.
- Equities market to experience rebound from recent lows. Improved investors’ optimism and expected positive effect of the AMCON arrangement would likely put key indicators of the equities market in an upward trajectory in the medium term, when the company is expected to buy up banks’ toxic assets.
- The bond market is set to receive a boost. We also anticipate an increase in state and corporate bond issues to better fund longer term projects. Also FG has plans to finance N897 billion of its total deficit worth N1.5 trillion from the local bond issues.
- Banks earnings likely to be suppressed, as competition is expected to reduce profit margin, especially with respect to interest rate spread. A resurgence in massive deposit mobilization drive may distort the relatively stable interest rates in the money market.</blockquote>
In: CBN|News|special reports
23 Apr 2010The Monetary Policy Committee of the CBN held their monthly meeting on April 15th. Afrinvest prepared an analysis of this communique. Read below and you can also download the report below too.
1. MPR is still retained at 6.0%, with an asymmetric corridor of +2.0% and -5.0%;
2. Technical Committee’s recommendations on the injection of the N500.0bn financing facility for the emergency power projects for industrial clusters, as well as modalities regarding the refinancing/ restructuring of banks’ exposures to the manufacturing sector and SMEs approved;
3. Banks required to submit their risk-based interest rate pricing models on a monthly basis. Loan pricing should henceforth be stated at a fixed spread above MPR and adjusted along with MPR movements;
4. Complementary policies being put in place by the CBN Board endorsed, including the revised guidelines for loan loss provisioning, the N200.0bn guarantee for real sector lending and regulations governing margin lending;
5. CBN to continue its efforts towards the expedited passage of the AMCON Bill and its speedy implementation.
Key Domestic Macroeconomic Statistics
Provisional data from the National Bureau of Statistics (NBS) show that in Q1 2010, real Gross Domestic Product (GDP) grew by 6.68%, largely driven by the non-oil sector. Overall GDP for 2010 is however projected at 7.53%, with the non-oil sector still expected to be the main driver.
The year-on-year inflation fell to 11.8% in March 2010, from 12.3% in February 2010. This could be attributed to numerous factors, including the on-going money contraction, delays in the passage of the 2010 federal budget and the improvement in the supply of petroleum products.
The MPC re-stated its position that the risk of inflationary pressure in the near-to-medium term remains real; it however asserted that it will continue to monitor price developments to facilitate an enabling environment for sustainable growth and employment.
Implications
Afrinvest Research re-iterates its position that the N500.0bn facility for emergency power projects is a step in the right direction. We also believe that the ongoing review of regulations governing margin lending as well as prudential guidelines on loan loss provisioning will improve transparency and corporate governance in the banking sector. It will also help the banks to more efficiently hedge against risks.
Retail lending rates have remained stubbornly high despite the significant fall in interbank rates, deposit rates and the Standard Deposit Facility rate. This has therefore resulted in a wide spread between lending and deposit rates. Banks are still unwilling to lend to the real sector, given their rather reticent approach to the creation of new risk assets. The MPC is therefore trying to establish a proper transmission mechanism from policy rate adjustments to market (interest) rates and, hopefully, channel funds from the banks to the real sector.
Afrinvest Research is of the opinion that though banks may still be unwilling to resume lending, they will however be forced to do so over time as they come under increasing pressure from a number of angles; coupled with recent CBN measures taken to encourage lending, shareholders would also begin to press for better returns than what currently obtains (deposits with the CBN at a low rate and money market securities with low yields), thus mounting pressure on the banks to resume lending. We also believe that the sector will witness even more intense competition amongst operators, which would naturally force them to resume lending as they fight for turf.
Central Bank of Nigeria Communiqué No. 69 (150)Here is the slide show for the February edition of the monthly lagos Business School’s Executive Breakfast session by Prof. Rewane:
LBS Executive Breakfast Session And Presentation - Feb 2010 (199)This blog is dedicated to informing users on the latest business and economic news news from the CBN and Nigerian Stock Exchange. Happy reading!